Margaret CPA in OH

This has been an interesting discussion as I've never seen a code T. I am confused about the references to boxes 4a and 4b. I do not see those boxes on any of several 1099R's or the input worksheet. Box 4 is Federal tax withheld. I see Boxes 2 and 2a as Gross distribution and Taxable amount. Am I missing something critical? Also I cannot find a checkbox on the ATX 1099R worksheet for a code J/T. Clearly I am missing something important and feel pretty dumb just now. Most of my clients have 1099R's and these are new things to me so I had better 'get with it!'

Alas, a whole $12 was withheld for federal, nothing for state. And now another wrinkle: reminiscent of the thread about checking prior year activity and comparing. I asked for the 1099DIV from her investments and a few small ones held alone. The sister found most of the documents and, sadly, it appears as though she liquidated nearly all her investments for about $162,139 with a LT gain of $132,200+ . $92,152 had no basis. I'm not impressed with the broker. I asked for some statements before this began and all the statements for the rest of year to try and see the securities and figure out something. It's so sad that her memory is failing and this situation just overwhelms her. With these transactions (I had only page 1, will get the rest later) she now owes IRS almost just over $5000 if IRS allows it. Ohio is the killer at $25,500. I hope they (client and sister) don't find more. I do want the backup pages but I think we're close. My head and heart hurt for her. She's been with me since 2004.

Max W and others. by using Form 4684 and following the memorandum mentioned for those scammed of income producing assets, her tax was reduced to basically the tax on her SS due to the high income prior to the itemized deduction from the scam. OIC is not an option anyway for federal as the limit is $50,000 owed. Ohio tax pro line person said the only option for the huge tax due is to work with the AG office after nonpayment and she gets the nasty gram. It's "only" $20,000+ at least not $200,000+. I will research further to see if there is something via the AG similar to CNC. Haven't found it yet.

Ohio starts with federal AGI which, of course, is before the standard or itemized deductions. Then there are state specific additions and deductions such as SS, not taxable in Ohio. I called to see if there was any way to take into account the scam. Nope. It might be something for the legislature to address while they are trying to eliminate income tax altogether.

Okay, I input the details on Form 4684 Section B, Casualty or Theft Gain or Loss, and the loss went to Sch. A minus $100. Her tax went from$190,000+ to $1700+ . Unfortunately the state has no mercy. Her state tax is $20,000+. They also do not have an easy payment plan without jumping through some hoops. But she is in a much better situation now. Thanks so much to you all, especially to BrewOne, for guiding me ultimately to the Memorandum mentioned above. This group is just great!

As above, "I tried to use the tool for an OIC but 'we are experiencing technical difficulties at this time.' " I now have found the Memorandum from the Office of Chief Counsel IRS, Number 202511015, release date 3.14.25. I am now comfortable listing it as a Casualty Loss because I am of the opinion that her situation fits Taxpyer 1-Compromised Account Scam. Client was told that her identity was stolen and the only way to preserve her retirement funds was to turn them over to the scammer who would invest in safer assets, the Bitcoin and gold. I'm now trying to fit this into the inputs for Casual Loss on Schedule A. Unfortunately the tax is still due but it may be reduced somewhat as the itemized deduction will now be pretty huge.

Found it but I'm not sure it is helpful in this case. I suppose an argument by someone could be made but she was responding to 'identity theft' and trying to protect her retirement fund from being accessed. So I guess I can input for a theft loss but this still applies: "The memo shows that the IRS recognizes that it can’t give taxpayers relief on the tax consequences of investment account withdrawals despite the theft of those funds, Lanning said. The theft loss deduction doesn’t eliminate the income..." Perhaps it may offset some of the taxable income. I'll try. Thanks for your help, even the lol.

I put that exact phrase into the search box and it just brought up your post. ????

Long time client apprised me a few weeks ago that she was scammed to the extent of her entire retirement, some 624,000. She has, I think, some dementia and is in denial. She eventually reported it to the FBI but they told her, sadly, she is one of thousands. She is holding out hope that she will not have to pay the $200,000+ in federal and OH tax due despite my caution that I can see no way out of it. She willingly withdrew all this money to buy bitcoin then gold and never saw any of it. The scammer told her that her identity was stolen and the only way to protect herself was to give them the money and they would invest it. So here we are and all I can see is an OIC. An installment agreement is for up to $50,000. I tried to use the tool for an OIC but 'we are experiencing technical difficulties at this time.' Does she need a tax attorney which she cannot afford? I've managed some installment agreements and a discharge due to inability to pay but not an OIC. Fortunately her competent sister was finally brought into the picture and I've advised her to get Form 2848. Other suggestions?

I just read the instructions for Form 5695 and I see this on Page 1: My bold. It seems to me from your description that the residence is not her home. I wouldn't do it. Who Can Take the Credits You may be able to take the credits if you made energy saving improvements to your home located in the United States in 2024. Home. A home is where you lived in 2024 and can include a house, houseboat, mobile home, cooperative apartment, condominium, and a manufactured home that conforms to Federal Manufactured Home Construction and Safety Standards. You must reduce the cost basis of your home if a residential energy credit is allowed for any expense for any property. The increase in the basis of the property that would result from the expenses will be reduced by the amount of the allowed credit. Main home. Your main home is generally the home where you live most of the time. A temporary absence due to special circumstances, such as illness, education, business, military service, or vacation, won't change your main home. Costs. For purposes of both credits, costs are

This is a good discussion and the client does not materially participate nor is an active participant, all is handled by a management company. I'm not worried about the losses, just wondering if they will offset future income. It doesn't sit right with me on Sch. C as I don't believe there is really a profit motive in the usual sense and it was used for strictly personal vacation time until the clients became too frail to travel. As it is in the trust and the surviving wife will not last more than a few months at most, and the Sch. E option seemed appropriate, I'm going with Sch. E and let the chips and losses fall where they may for 2025 when it becomes a trust asset.

Schedule E and selected Vacation/Short Term Rental which seems to exactly describe the unit. No personal use, though. After wife passes, I don't know where it goes from her trust but am certain I will no longer be involved. It may be split between surviving daughters who are in tax brackets I could only dream about and they have 'their people.' The ailing, aging wife has had a special affinity for me for 25 years since I managed the business book for her software company. She is very special to me. I will miss her greatly.

Yes, you can edit, add, subtract lots of things. Click on the client letter, Edit Formatting. Select the letter to edit and scroll to the place you would like that option to be included. The Save and you have the choice for only that client or all subsequent. I use this tool with some frequency, mostly to tailor for a specific client.

No, not 49 days, 49 weeks with 38 different renters. It was a available for 49 weeks from Jan. 20 through year end and apparently was used the whole time through the end of the year. Most folks were for 1 week but several were for more than one week. The huge loss is because of depreciation of a unit valued at $880,500 ($30,685), high commissions ($11,066), and high real estate taxes ($14,421) as well as HOA fees of $7200 and a special assessment for insurance of $5148. This is Amelia Island FL. The total rent received was $50,500. I couldn't afford to stay there!

Thanks to you both. I think the average rental would be 7 days or less as I counted 38 different rental payments for 49 weeks so math would support that average. When I selected Vacation/Short Term Rental I suppose the assumption is the average of 7 days or less. I did read up on this but just using belt and suspenders as I am fairly certain there will be push back on why no deduction. Is it correct, though, to assume that eventual net income will be offset by these carryover losses at least? Thanks again, as always, for the great support and insights here.

At least I think it's a problem. I've had many folks with residential rentals. These clients have a million dollar condo on Amelia Island. Just last week I found out it was being rented out like an air bnb since January 2024. Client husband had Parkinson's and actually passed this January. Wife will likely die within a month or two. But the condo was in wife's revocable trust and she was still competent early last year and decided they would no longer be able to use it so to rent it. So in ATX I listed it as vacation/short term rental which I think is correct. And the $27000+ loss is not deductible as unallowed. Is this because it is short term rental? Do the losses carry over until income offsets them? By the end of 2025 this will be in the trust and go to I don't know and almost for sure an attorney will swoop in to manage this which is fine with me. But how to explain to daughter that the loss is not deductible? Just the facts, ma'am? I've had way too many oddities this year!

Yep, been there, done that, too.

Can you tell I'm blithering now? He died in January 2025. This bulging disc at L3 and the drugs trying to keep the pain at bay are playing tricks.

And the wrinkle grows larger. For 2024 the condo was placed in service for rent since mid-January 2024, husband passed early January 2025 so not sure what the trust says when one dies. I have pretty good value for depreciation from the auditor's website. Wife will likely pass away within weeks, in hospice care. I don't know who gets it then but am thinking that's a 2025 issue and, in any case, does not affect the depreciable value for the rental activity. Basis changes only come into play with his and her final 1040 for 2025 as both are expected to be deceased and likely all ends up in some trust or other. I don't know who will be managing the trust return(s) after wife passes, probably the high priced attorney as the daughters will likely not choose me - and that's okay with me!

Sigh, yet another wrinkle. Elderly long time clients; husband passed away early January; early 2024 condo in FL previously jointly owned was place in wife's trust (I don't yet know what kind, just got this info today) to convert to rental property. So I have all, I think, the data from the rental. If a revocable trust, does this just go on Sch. E as usual? Never had one of these.

HRS, how do you take your name and details off the directories?

DANRVAN, I do have a copy of the transfer of deed from mother to daughter (client) for 0 amount. And I have a copy of a decision Estate of Linderme v. Commissioner, 52 T.C. 305 (1969) which includes the statement, " It has been successfully argued in the past that a right can be retained without being reserved, and that the continued occupancy of the home after the transfer of title, without paying fair market rent, is evidence f an implicit agreement, understanding or assumption of the parties of the transaction." I think this describes exactly this situation So I'm going with that. I appreciate the reminder of the step up in basis and possibility of loss. It looks like the selling expenses would constitute a small loss. Thanks again, friends!

Thanks for the quick replies. I believe it was implied, not stated, but mother did live there until death without rent so all good. I just need to get value at dod which I suspect is pretty close to sale date. Still reported on Sch. D? Sale of second home and long term if gain, but likely a small loss with expenses of sale so no offset. There was no 1099S.

Well, that just stinks! Fraud involved and they get a 1099C.

Just checking here. Client's mother gifted condo to her with life estate. Mother passed early 2024, condo sold soon after. Basis is mother's basis plus improvements (new HVAC system). Sales price less basis less selling expenses equals long term gain. Right track?